HomeMy WebLinkAbout2/20/2002 - STAFF REPORTS (2) DATE: FEBRUARY 6, 2002
TO: COMMUNITY REDEVELOPMENT AGENCY
FROM: REDEVELOPMENT DIRECTOR
APPROVAL OF AN EXCLUSIVE AGREEMENT TO NEGOTIATE WITH GEIGER, LLC OF
BEVERLY HILLS, CALIFORNIA ON AN AGENCY-OWNED PARCEL AT THE CORNER
OF GENE AUTRY TRAIL AND RAMON ROAD
RECOMMENDATION:
It is recommended that the Agency approve an Exclusive Agreement to Negotiate
with Geiger, LLC on Agency- and privately-owned parcels of+ 38 acres at the
corner of Gene Autry Trail and Ramon Road.
BACKGROUND:
In September, 1998 the Agency entered an Agreement with Westar Associates,
Inc. of Costa Mesa on the Agency-owned parcel at the corner of Gene Autry Trail
and Ramon Road, commonly known as the dumpsite parcel. Westar had an
option period that allowed it to conduct environmental assessments, negotiate with
the adjacent property owner, and design and market the project to tenants.
Westar was successful gaining tenant interest in the site (it was where Lowe's first
looked before landing across the street) but was unsuccessful developing a
workable remediation plan for the site. The Agency renewed the Agreement with
Westar in September, 2000, but Westar withdrew from the project in March, 2001.
Staff received a letter of interest from M &A Gabaee, LP in April 2001, along with
a letter of intent from Laguna Pacific Environmental, Inc., another developer the
same week. During the next several months, staff has evaluated the two
proposers and the tentative development plans. Laguna Pacific, meanwhile,
placed the Epsteen parcel under contract. Since both parcels are necessary for a
quality development to occur, this was seen as a positive development, and staff
recommended that the Agency enter an agreement with Laguna in August, 2001.
Laguna had asked for an Exclusive Agreement to Negotiate for a period of up to
180 days, during which it would complete the market study and the preliminary
remediation engineering, as well as commence the process of obtaining
entitlements for a project. The first milestone was that the company would
prepare a packet, including a preliminary site plan, for the International Council of
Shopping Centers conference in Palm Springs in early October to market the
property.
However, the Laguna agreement unraveled shortly after the Agency's approval
because they were unable to agree on final deal terms with Epsteen. Meanwhile,
Geiger optioned the Epsteen parcel, and all parties waited until the Agency could
terminate the Epsteen agreement. Geiger, which has previously undertaked
landfill remediation projects in Los Angeles County, still has to renegotiate their
deal with Epsteen in order to move forward, as their option has expired.
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The terms of the deal is that the Agency shall set a market price for the parcel but
agree to offset a proportionate share of the remediation cost against the sales
price. Geiger shall bear the cost of all the land planning and engineering to entitle
the project. While staff had originally intended to wait before remarketing the
property, the County has stepped up enforcement of the landfill maintenance and
post-closure responsibility, necessitating a choice between spending a
considerable amount of redevelopment funds closing off the site (the Agency
budgeted $50,000 in the prior fiscal year for remediation engineering, but that
money was reprogrammed to other uses), or requiring a developer to do it as part
of a Disposition and Development Agreement. This agreement reflects the latter.
J�S. RAYMON
edevel pment Dir r
RO` �
APPVED r
Executi a for
ATTACHMENTS:
1. Resolution
2. Agreement to Negotiate
REVIEWED BY DEn OF FINANCE
EXCLUSIVE AGREEMENT TO NEGOTIATE
WITH GEIGER, LLC FOR THE
DEVELOPMENT OF A SHOPPING CENTER
THIS EXCLUSIVE AGREEMENT TO NEGOTIATE ("Agreement"), is made this_
day of 2002, by and between the COMMUNITY REDEVELOPMENT
AGENCY OF THE CITY OF PALM SPRINGS ("AGENCY") and GEIGER, LLC ("Developer").
RECITALS
The parties entered into this Agreement on the basis of the following facts,
understandings, and intentions:
A. The Agency is a public body, corporate and politic, exercising governmental
functions and powers and organized and existing under the Community Redevelopment Law
of the State of California (Health and Safety Code Sections 33000, et se .).
B. The Agency desires to effectuate the Redevelopment Plan for Redevelopment
Project Area No. 4, now a part of Merged Project Area #1, by providing for the development of
a regional retail shopping center featuring a big box retail user within a portion of the
approximately 38-acre vacant property at the northeast corner of Gene Autry Trail and Ramon
Road (the "Shopping Center").
C. The Developer is experienced in shopping center development and remediating
sites subject to environmental contamination and has dealt with the major tenants who might
occupy the Shopping Center. The term "Developer," as used herein, includes the principals,
partners, and joint venturers of Developer and all obligations of Developer herein shall be the
joint and several obligations of such principals, partners, and joint venturers.
D. Due to various uncertainties, including market conditions and the availability of
tenants, the need to develop a land use plan with adequate environmental review, and
conditions of the site, including prior soil contamination issues creating significant remediation
costs, the parties believe additional due diligence is necessary before a conclusive purchase
agreement can be concluded.
F. The Agency and Developer desire, for the period set forth herein, to negotiate
diligently and in good faith to prepare an agreement whereby the Developer would develop the
Shopping Center Site for a major regional power center.
NOW, THEREFORE, and in consideration of the mutual covenants hereinafter
contained, it is mutually agreed upon by the parties as follows:
SECTION 1. NATURE OF NEGOTIATIONS.
A. Good Faith. The Agency and the Developer agree that, for the period set forth
in Section 2 herein, they will negotiate diligently and in good faith to prepare and enter into an
agreement (the "DDA") consistent with the provisions of this section for the development of a
Shopping Center (the "Project") on the Site specified herein. The development will be subject
to all rules, regulations, standards, and criteria set forth in the Redevelopment Plan, the City's
Geiger-Gabay agreement 2-02.wpd
General Plan, applicable specific plans and zoning regulations, and with this Agreement. The
DDA will generally be in the form negotiated by the Agency with other development entities.
B. Site. The Project shall be located upon all or a portion of the real property
designated as the "Shopping Center" or the "Site", as shown in the "Site Map," attached hereto
as Exhibit "A" and incorporated herein by this reference. The Site is divided into two
ownerships, herein designated as the "Agency Parcel" and the "Epsteen Parcel". The site may
include only a portion of the Epsteen Parcel. It is anticipated that the project will be developed
in phases.
C. Nature of Shopping Center and Ownership. The Developer's interest shall be
fee. The design shall be consistent with the Agency's and the City's design guidelines and
Developer shall obtain architectural review from the City's Design Review Board. The
Developer is responsible for obtaining all approvals and entitlements, arranging financing, and
constructing all improvements upon the Site. The Shopping Center shall be a "power center"
with a major tenant big box retailer occupying at least 100,000 or more square feet, and
ancillary retail tenants to include uses such as general merchandise, food, theaters, home
improvement, clothing, electronics, sports, restaurants, and similar uses. In the event that after
diligent good faith effort Developer cannot get a commitment from a big box user in the
category of Wal-Mart, Home Depot, Costco or other similar user, then Developer may propose
alternative smaller major tenants in a mixed retail use designed to produce significant sales
tax. The construction cost of the Project will exceed $8,000,000.
D. Soils. Agency has disclosed all information it has concerning the condition of
the soils, which contain contamination and require remediation. Agency shall sell the property
in "as is" condition and not retain liability for soils conditions following the remediation and sale
of the site. It shall be the obligation of the Developer to investigate the site and develop a
remediation plan which can be implemented by Developer within the project economics; the
remediation plan is subject to approval by the Agency. Agency may apply for financial
assistance from the State or Federal government to assist Developer with the remediation of
the contaminated portion of the site, but it shall be the Developer's responsibility to finance and
undertake the remediation of the Site. The Agency and Developer, together with the County
of Riverside Department of Environmental Health, have determined that a "partial clean
closure" of the site may be the most practical approach, and that California Health & Safety
Code ("H&SC") § 33459.1(a)(1) allows Redevelopment Agencies to "take any actions that the
agency determines are necessary and that are consistent with other state and federal laws to
remedy or remove a release of hazardous substances on, under, or from property with a
project area, whether the agency owns that property or not," thereby creating additional
authority to clean the site, which the Agency may utilize to assist the Developer in
accomplishing the remediation. The Developer acknowledges the Agency will not have any
obligation to utilize any public resources except those it may receive from the State or Federal
government. Developer will investigate and determine if it will decline to acquire any parcels
which cannot be adequately mitigated, prior to the expiration of the period to negotiate
provided herein.
E. Financial Provisions. Developer shall acquire a fee interest in all or a portion
of the Site at a price to be agreed upon by the parties with the actual net usable square
footage determined through survey and with an offset for remediation costs.
Geiger-Gabay agreement 2-02.wpd -2- _q
1. Developer shall be responsible for funding the cost of any condemnation
action.
2. Developer shall be responsible for financing and constructing all
improvements.
3. Developer shall pay for all necessary public improvements and pay all
City's fees for processing the Project, without assistance from the Agency.
4. Nothing in this agreement shall be construed to be contrary to the
provisions of Health & Safety Code Section 33426.5:
"Notwithstanding the provisions of Sections 33391, 33430, 33433, and 33445, or any
other provision of this part, an agency shall not provide any form of direct assistance to:
(b) (1) A development that will be or is on a parcel of land of five acres or more
which has not previously been developed for urban use and that will, when
developed, generate sales or use tax pursuant to Part 1.5 (commencing with
Section 7200) of Division 2 of the Revenue and Taxation Code, unless the
principal permitted use of the development is office, hotel, manufacturing, or
industrial, or unless, prior to the effective date of the act that adds this section,
the agency either owns the land or has entered into an enforceable agreement,
for the purchase of the land or of an interest in the land, including, but not limited
to, a lease or an agreement containing covenants affecting real property, that
requires the land to be developed.
(2) For the purposes of this subdivision, a parcel shall include land on an
adjacent or nearby parcel on which a use exists that is necessary for the legal
development of the parcel.
(e) This section shall not be construed to apply to agency assistance in the
construction of public improvements that serve all or a portion of a project area
and that are not required to be constructed as a condition of approval of a
development described in subdivision (a), (b), or(c), or to prohibit assistance in
the construction of public improvements that are being constructed for a
development that is not described in subdivision (a), (b), or(c)."
5. Developer shall be responsible for all soils remediation costs.
6. Developer's remediation costs for the Agency parcel may be offset
against the sale price to the extent of the sale proceeds or may be offset
for the entire site in the same manner as for the Epsteen parcel. The
Agency parcel may be contributed to the project at no charge.
F. Schedule. The goal will be to develop the Shopping Center for opening by the
Third Quarter of 2003 through the First Quarter of 2004, with an understanding that the
opening of the project may be phased. The DDA shall contain a Schedule of Performance.
Due to the need to possibly acquire certain parcels through condemnation or environmental
enforcement action under §33459, title to the parcels may be delivered in phases.
G. Use, Transfer, and Maintenance Restrictions. The DDA will generally be
subject to restrictions on use and transfer during construction and for a specified period
thereafter (i) to assure that the use will be consistent with and promote the Redevelopment
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Geiger-Gabay agreement 2-02.wpd -3- /' � IpG�—��"
Plan, (ii) to protect the character of the Project and to provide an adequate long-term financial
return, (iii) to prevent speculation, and (iv) to assure that any transferee has the resources,
capability, and experience to successfully operate the Shopping Center. In addition,
restrictions shall be recorded to assure proper maintenance of landscaping and improvements.
H. Property Acquisition. To the extent permitted by law, the DDA will contain
provisions that the Agency may consider the use of its power of eminent domain for site
assemblage should voluntary negotiations be unsuccessful, provided that all costs shall be
borne by the Developer.
SECTION 2. PERIOD OF NEGOTIATIONS.
A. Period of Exclusive Negotiation. The period of negotiation shall be six (6)
months from the date this Agreement is signed by the Agency, except as provided herein.
B. Early Termination. Within one hundred twenty (120) days from the date
hereof, the parties shall meet and review the status of performance under this Agreement
(herein "Review Meeting"). Within such period, Developer should have done the following:
1. Prepared a preliminary site plan.
2. Prepared a preliminary financial proforma.
3. Have developed a tenant interest list specifying tenants contacted and
those from whom commitments have been or will be obtained. To the extent Developer wants
such information to remain confidential, they shall be supplied to the Agency only if
confidentiality can be maintained.
If the parties determine that the Project is not economically feasible, or if
Agency finds Developer's progress with respect to the foregoing unsatisfactory, then Agency
may terminate this Agreement.
C. Extension of Time. This Agreement shall terminate after the expiration of the
period set in Subsection A, unless early termination under Subsection B, or unless extended
as follows:
1. For sixty (60) days, if an agreement has been prepared by the Agency
and executed by the Developer and has been submitted to the Agency
but has not yet been approved by the Agency Board; or
2. For thirty (30) days if the major business terms have been agreed to and
the Executive Director determines that further negotiations are likely to
result in a written agreement; or
3. By mutual agreement of the parties.
D. Agency Approval. Developer understands and acknowledges that if
negotiations culminate in an agreement, such agreement shall be effective only after and if the
agreement has been considered and approved by the Agency Board after public hearing
thereon as required by law.
Geiger-Gabay agreement 2.02.wpd -4- e t� �'
SECTION 3. DEVELOPER'S RESPONSIBILITIES.
During the period of negotiation, Developer will prepare such studies, reports, and
analysis as shall be necessary to permit Developer to determine the feasibility of the Project.
During the period of negotiation, and as requested by the Agency, the Developer shall submit
to the Agency the following:
A. Full disclosure of Developer's principals, partners, joint venturers, negotiators,
consultants, professional employees, or other associates of the Developer who are participants
or principals of the Project, and all other relevant information concerning the above.
B. Statement of financial condition in sufficient detail to demonstrate Developer's
financial capabilities, those of its principals, partners, joint venturers, and those of its
prospective developers to satisfy the commitments necessitated by the Project, including all
information necessary to demonstrate the availability of construction and permanent financing.
To the extent Developer wants such financial statements to remain confidential, they shall be
supplied to the Agency only if the confidentiality of the statements can be maintained.
C. All information necessary for the design of the Project to meet the Agency's
reasonable requirements. This information shall be sufficient to allow Agency to evaluate site
configuration, architectural design and similar issues.
D. All information necessary to show tenant availability and interest, the nature of
the proposed tenants, and the financial strength and resources of the tenants. To the extent
Developer wants such information to remain confidential, they shall be supplied to the Agency
only if confidentiality can be maintained.
E. All information necessary to complete Midterm Review under Section 2.
The Developer shall negotiate exclusively with the Agency's negotiating team and with
no other persons unless expressly authorized to do so by the Agency's negotiating team.
During the period of negotiations, no statements will be made by the Developer or Agency to
the media without the approval of the Agency's negotiating team. No prepared statements
shall be released to the media without the mutual consent of the respective negotiating teams.
SECTION 4. AGENCY'S RESPONSIBILITIES.
A. Agency Assistance. The Agency shall cooperate fully in providing Developer
with appropriate information and assistance, but such assistance shall not include financial
assistance unless specifically provided herein.
B. Preparation of Agreement. If agreement is reached on the business terms for
inclusion in the agreement, the Agency shall prepare such agreement for consideration by the
Developer. Agency's expenses shall be absorbed by Agency.
C. Environmental Quality Act. The Agency will assist Developer in preparing an
environmental impact report or such environmental documentation as may be necessary for
the Project.
Geiger-Gabay agreement 2-02 wpd -5-
D. Zoning. The Agency will undertake all acts necessary to rezone such portions
of the property as may be necessary to permit the Shopping Center on the Site.
E. Grant Funds. The Agency may, but is not required to, apply for financial
assistance for the project from the U.S. Environmental Protection Agency, Department of
Housing & Urban Development and the California Integrated Waste Management Board or
other relevant agencies.
F. Epsteen Remediation. If both parties deem it appropriate to the project, the
Agency may order the owner of the Epsteen parcel to clean up its site, under the powers
granted to the Agency by California Health & Safety Code ("H&SC") § 33459.1(a)(1).
SECTION 5. MISCELLANEOUS.
A. No Commissions. The Agency shall not be liable for any real estate
commission or any broker's fees which may arise herefrom. The Agency represents that it has
engaged no broker, agent, or finder in connection with this transaction, and the Developer
agrees to hold the Agency harmless from any claim by any broker, agent, or finder retained by
the Developer.
B. Ownership of Documents. If the negotiations contemplated by this Agreement
do not result in the execution of an agreement, Developer shall transfer to Agency copies of
any reports, studies, analysis, site plan layouts, engineering studies, memorandums, or similar
documents regarding the proposed development and prepared during the period of
negotiations (except tenant information and proformas), which copies shall become the
property of Agency. Such transfer shall be made without any representation or warranty by
the Developer as to the accuracy or sufficiency of the contents of such documents and shall
be made subject to the rights of the preparers of such documents including, without limitation,
the copyright (if any) associated with such documents.
C. Purpose of Contract. It is expressly understood and agreed by the parties
hereto that this is an Agreement regarding the conduct of contract negotiations only and does
not convey any interest in the property whatsoever. It is further agreed and understood that
this Agreement does not imply any obligation on the part of the Agency to enter into any
agreement that may result in negotiations contemplated herein.
D. Amendment. This Agreement may only be amended by a document in writing
signed by the parties hereto.
E. Time for Acceptance. This Agreement, when executed by the Developer and
delivered to the Agency, shall constitute a binding offer which cannot be withdrawn prior to
February 15, 2002, so that the Agreement may be presented to the Agency Board.
Notwithstanding any other provision herein to the contrary, Agency shall not be obligated
hereunder unless and until the Agency Board authorizes the Chairperson to execute this
Agreement.
F. Corporate Authority. The persons executing this Agreement on behalf of the
parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly
authorized to execute and deliver this Agreement on behalf of said party, (iii) by so executing
Geiger-Ga bay agreement 2-02.wpd -6- 6& !�
this Agreement, such party is formally bound to the provisions of this Agreement, and (iv) the
entering into this Agreement does not violate any provision of any other Agreement to which
said party is bound.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day first
above written.
"AGENCY"
COMMUNITY REDEVELOPMENT AGENCY OF
THE CITY OF PALM SPRINGS, a public body,
corporate and politic
Chairman
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
Agency Counsel
[SIGNATURES CONTINUED ON NEXT PAGE]
""Geiger-Gabay agreement 2-02.wpd -7- ' — • �/
"DEVELOPER"
GEIGER, LLC
(Check One: _individual, _partnership, _corporation)
[NOTARIZED]
Signature
Print Name:
Print Title:
[NOTARIZED]
Signature
Print Name:
Print Title:
Mailing Address:
(Corporations require two signatures; one from each of the following: (A) Chairman of Board,
President, any Vice President; AND (B) Secretary, Assistant Secretary, Treasurer, Assistant
Treasurer, or Chief Financial Officer.)
[END OF SIGNATURES I NOTARY JURAT(S) FOLLOW]
Geiger-Gabay agreement 2-02.wpd -8- ��"
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
ON before me, Notary Public,
personally appeared
personally known to me(or proved to me on the basis of satisfactory evidence)to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal. [SEAL]
Signature
STATE OF CALIFORNIA )
ss.
COUNTY OF )
ON before me, Notary Public,
personally appeared
personally known to me(or proved to me on the basis of satisfactory evidence)to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal. [SEAL]
Signature
Geiger-Gabay agreement 2-02.wpd
RESOLUTION NO.
OF THE COMMUNITY REDEVELOPMENT AGENCY
OF THE CITY OF PALM SPRINGS, CALIFORNIA,
APPROVING AN EXCLUSIVE AGREEMENT TO
NEGOTIATE WITH GEIGER, LLC OF BEVERLY
HILLS, CALIFORNIA FOR THE PURCHASE AND
DEVELOPMENT OF A REDEVELOPMENT-
AGENCY-OWNED PARCEL AND A PRIVATELY
OWNED PARCEL IN MERGED PROJECT AREA #1
( FORMERLY THE RAMON - BOGIE
REDEVELOPMENT PROJECT AREA)
WHEREAS the Community Redevelopment Agency does own a parcel of land of
approximately 14 acres in Merged Project Area #1, formerly known as the Ramon-Bogie
Project Area; and
WHEREAS the Agency desires to sell the parcel to a developer that can return the land
to productive use and facilitate additional development in the area around the site,
including the generation of sales tax for the City of Palm Springs, and
WHEREAS Geiger, LLC of Beverly Hills, has determined that the development of the
site may be practical; and
WHEREAS Geiger, LLC has requested the Agency to enter into an Exclusive Agreement
to Negotiate for a period of six months on the parcel while they begin the process of site
planning and while the remediation design is done.
NOW THEREFORE BE IT RESOLVED by the Community Redevelopment Agency of
the City of Palm Springs, that the Exclusive Agreement to Negotiate between the
Agency and Geiger, LLC is hereby approved.
ADOPTED this day of , 2002.
AYES:
NOES:
ABSENT:
ATTEST: COMMUNITY REDEVELOPMENT AGENCY
OF THE CITY OF PALM SPRINGS, CALIFORNIA
By
Assistant Secretary Executive Director
REVIEWED &APPROVED AS TO FORM